Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

The Stock Market's 'Mission Accomplished' Moment

By

Will all-time highs bring out buyers or sellers?

PrintPRINT
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

Looking out at the road rushing under my wheels; looking back at the years gone by like so many summer fields.
-- Jackson Browne

While on the train into the city this morning for some early segments on Yahoo! Finance, I discussed my upcoming segment on the market with the producer. I suggested we call it, "Mission Accomplished!" as there has been a Herculean effort to manipulate prices higher since the depths of the financial crisis, and here we are: all-time highs in the S&P (INDEXSP:.INX).

Whether we dub it "The Federal Reserve's 'Mission Accomplished' Moment" or "President Obama's 'Mission Accomplished' Moment" is a moot point; the efforts have been intertwined and coordinated. Against all odds, with the financial system teetering on the brink of collapse, they manufactured a 160% rally in the S&P since March 2009.

It's been relentless, it's been impressive, and for those seeking historical precedent, it's been extremely frustrating.

With the DC drama behind us-for now-and earnings upon us, the collective wisdom has embraced the notion that the path of least resistance is due north into year-end. Most fund managers are trailing their benchmark and can't afford to wait for a pullback, or so the thinking goes. You can feel anxiety sweeping in the streets; the question, of course, is whether it continues to self-perpetuate.

With 20% of the S&P having reported third quarter earnings, 55% have beaten top-line estimates and 71% have beaten earnings-per-share estimates. That's par for the course as these things go, but it remains to be seen how much it will matter. Of our four primary metrics, psychology remains the primary driver of asset classes with structural influences (rates) a close second. Fundamental data and technical analysis follow, playing the roles of post-rationalization.

There are two dynamics throwing caution to the wind; the first is the long-term chart of the VXO (INDEXCBOE:VXO), which is edging toward massive support (this "fear proxy" is a contra-tell for the market, rising when it falls and vice versa). While it dribbled along these levels for years at a time (2004-2006), it's worthy of a mention as we fit together the pieces of the market puzzle.



The other caveat is the price action in select stocks-Tesla (NASDAQ:TSLA), Yelp (NYSE:YELP), Priceline (NASDAQ:PCLN), Netflix (NASDAQ:NFLX), LinkedIn (NYSE:LNKD), Facebook-which have enjoyed a parabolic frolic, raising the question of whether they've entered the "panic" phase of our psychological continuum (denial, migration, panic).

And of course, there's the perception that corporate America has a mulligan on fourth quarter earnings following the government shutdown. In short, with the downside rationalized and the upside all but expected, we must ascertain if the easy trade is a bit too easy.

One thing for sure, we'll have plenty of data to digest this week, including earnings from Netflix, McDonald's (NYSE:MCD), Coach (NYSE:COH), Boeing (NYSE:BA) Caterpillar (NYSE:CAT), AT&T (NYSE:T), Dow Chemical (NYSE:DOW), Ford (NYSE:F), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). We'll also have the EU summit starting on Thursday as it looks to strengthen policy coordination and increase regulatory safeguards.

Watch the banks, breadth, high-beta, and S&P 1730ish (previous breakout) as we together find our way.

And good luck out there-we do indeed live in interesting times.

R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
< Previous
  • 1
Next >
Position in SPY.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE